Improving access to water services in Metro Manila through an output-based approach

Last month, during a visit to the Philippines I had the opportunity to meet some of the 28,000 families* whose lives have been changed by the Manila Water Supply Pilot Project[5].

We visited Southville in Barangay San Isidro in the Rodriguez Municipality. This neighborhood was built from a government-financed housing project that resettled about 10,000 poor households. They used to be informal settlers, some living along the Manggahan floodway or Pasig River that were affected by the flood caused by typhoon Ondoy (International name: Ketsana).

The housing project included only shallow wells for its water supply, providing one for every 600 people, or more. Neighborhood residents told us that before the project rolled out, they needed to make long queues to fetch water and the wells would frequently run out of water. In addition, the quality of the water coming out of the wells was not potable, so they couldn’t drink it, forcing them to buy water at very high prices.

The pilot project that was implemented by Manila Water Company (MWC) and funded by a grant of the Global Partnership of Output-Based Aid[6] (GPOBA) – a multi-donor trust fund administered by the World Bank – made it possible to connect these households to the water network. Since 2011, households have been receiving potable water directly in their homes.

The residents also told us that they could not afford the connection fee to the water network, but thanks to the project that subsidized the connection fees, they have a more decent life. Nowadays they can take daily showers, while previously they could only do so twice a week.

They are also paying less for water. Even though they are paying for a monthly water bill, this cost is lower than what they used to pay for less water. With these savings they are able to buy food – such as more rice.

Have you heard before about the output-based aid approach? The output-based aid approach is the use of subsidies to incentivize service providers to provide access to basic services to poor households.

This approach is called output-based because the subsidies are not paid until after it has been verified that the service, which in this case is potable water, is being provided to the households. This means that the service provider has already built the required infrastructure and connected the household to the water network.

The subsidy is an incentive to the service providers to connect the poor households covering the part of the connection fee which poor households cannot afford. Once connected, however, the beneficiaries become regular customers and pay the monthly bills based on their consumption. MWC has a 90% collection efficiency of monthly bills in Barangay San Isidro.

The Manila Water Project is one of the 35 pilot projects that GPOBA has funded in several countries in Asia, Africa, Latin America, and the Middle East in infrastructure and social sectors. Do you know of any other project following this approach in other countries, or in other sectors?

Given the successful results, the Government of the Philippines is considering extending the pilot project that was only for water supply through one service provider (MWC), to a national output-based aid facility for water and sanitation services. In expanding the project, subsidy funds would become available to any service provider in the Philippines interested in extending access to these services to poor households.

An Output-Based Aid Facility for water and sanitation services has been implemented successfully in Honduras and one is now being created in Indonesia and another one in Kenya, both also as a result of successful pilot projects. Other water pilot projects have also been implemented successfully in Vietnam, Morocco, India, and Uganda.

Based on my experience in output-based aid projects, the Manila Water Project is a success and there is a great potential and need in the Philippines to prepare a National Output-Based Aid Facility for water and sanitation. What do you think? How would you like to see this facility working in the Philippines?

The video above shows how the pilot project, through the use of output-based aid subsidies, has changed the lives of poor households in Metro Manila.

You are welcome to share your comments on this blog, the project approach and the expansion plans we would like to see in the Philippines for the water and sanitation sectors.

Also, stay tuned for a newly revitalized Output-Based Aid Community of Practice where you can comment, share ideas and collaborate. We are working on an interactive platform to complement a redesigned website which should be ready in the second semester of this year.

(*) These post was corrected to note the project has benefited 28,000 families --not people, as originally published.